NOURIEL ROUBINI BLOG tracks the media appearances of Dr Nouriel Roubini his interviews articles debates books news speeches conferences blogs etc..Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Wednesday, September 2, 2015

Nouriel proposes an early-warning system for Financial Tsunamis

NEW
YORK – Recent market volatility – in emerging and developed economies
alike – is showing once again how badly ratings agencies and investors
can err in assessing countries’ economic and financial vulnerabilities.
Ratings agencies wait too long to spot risks and downgrade countries,
while investors behave like herds, often ignoring the build-up of risk
for too long, before shifting gears abruptly and causing exaggerated
market swings.

Given
the nature of market turmoil, an early-warning system for financial
tsunamis may be difficult to create; but the world needs one today more
than ever. Few people foresaw the subprime crisis of 2008, the risk of
default in the eurozone, or the current turbulence in financial markets
worldwide. Fingers have been pointed at politicians, banks, and
supranational institutions. But ratings agencies and analysts who
misjudged the repayment ability of debtors – including governments –
have gotten off too lightly.

In principle, credit
ratings are based on statistical models of past defaults; in practice,
however, with few national defaults having actually occurred, sovereign
ratings are often a subjective affair. Analysts at ratings agencies
follow developments in the country for which they are responsible and,
when necessary, travel there to review the situation

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Nouriel Roubini, (born March 29, 1958, Istanbul, Turkey), Turkish-born American economist and educator who was best known for predicting the 2007–08 subprime mortgage crisis in the United States and the subsequent global financial crisis.

Born to Iranian Jewish parents, Roubini moved with his family to Iran and Israel before they settled in Italy in 1962. After a year at Hebrew University of Jerusalem, he studied economics at Bocconi University in Milan (B.A., 1982) and Harvard University (Ph.D., 1988), where he specialized in macroeconomics and international economics. He joined the economics faculty at Yale University in 1988 and taught there until 1995, when he moved to New York University. He also served as a visiting scholar to the International Monetary Fund (IMF), was a research associate with the National Bureau of Economic Research (NBER), held single-year terms on the White House Council of Economic Advisers (1998–99) and at the U.S. Department of the Treasury (1999–2000), and cofounded (2004) the consulting firm Roubini Global Economics. Roubini spent much of his early career studying countries that experienced extreme economic failures, such as Mexico (in 1994), Thailand and other countries associated with the 1997 Asian financial crisis, Russia (1998), and Argentina (2000). He determined that each shared one common element: a massive current account deficit.(www.britannica.com)

Roubini Quote : "The Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. "

Nouriel Roubini is the Chairman and CEO of Roubini Macro Associates, LLC, his own global macroeconomic consultancy firm. He is also a professor of economics at New York University’s Stern School of Business. Dr. Roubini has extensive policy experience as well as broad academic credentials. From 1998 to 2000, he served as the senior economist for international affairs on the White House Council of Economic Advisors and then the senior advisor to the undersecretary for international affairs at the U.S. Treasury Department, helping to resolve the Asian and global financial crises, among other issues. The International Monetary Fund, the World Bank and numerous other prominent public and private institutions have drawn upon his consulting expertise.

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